When it comes to spending and saving and juggling debt while trying to build your savings there is no shortage of advice. From well-meaning tips passed down through generations to the latest TikTok trends, financial myths can sneak up on us and mess with our money mindset. Here at The Beans, we are about simplifying your path to financial balance, and in this blog, we will break down some of the most common myths so you can stress less and enjoy your money more.
Myth 1: You Need 3-6 Months of Emergency Savings
When it comes to saving, the idea of building an “emergency fund” can be overwhelming, especially when people throw around numbers like six months’ worth of living expenses! Six months sounds lovely, but it’s not necessary. For most of us, that money would be better spent paying off high interest debt or investing in our future.
Research shows that just a few hundred dollars in savings makes a big difference in how you handle daily financial decisions.
At The Beans, we set our Essential Savings objective at $2,500. With $2500 you are protected from most economic shocks, meaning it’s enough for you to bounce back when something big comes up. Does $2500 still seem out of reach? Don’t worry, you will get there faster than you think when you automate your monthly Essential Savings contributions.
Myth 2: You Need to Pay Off Your Debt Before You Start Saving
The order of operations is as important as the right-sizing of the goal. Once you establish your Essential Savings you will not only make stronger financial decisions overall (hello, less stress), but your debt payoff will go even faster, so start there.
If you are sitting on a savings balance OVER $2500 and are paying down high interest debt, make a one-time draw and clear that debt then build that Savings back over time.
Myth 3: You can’t enjoy your hard earned money with debt
At The Beans, we believe in spending intentionally and research shows that when you spend money in alignment with your values you actually get more value per dollar. What do you value? What brings you joy? Make space for these expenses so that you can enjoy your hard earned money while you tackle your debt. It will make the journey more fun, which will build momentum and support your success over time.
Balancing spending and saving while tackling debt doesn’t have to be an all-or-nothing game. By debunking these common financial myths, you can approach your money with a more realistic mindset. Remember, it’s all about creating a Plan that works for you– one that includes building your Essential Savings, paying off debt strategically, and making room for the things that bring you joy. With your Plan you can stress less, enjoy your money more, and make financial progress.